commodities (10)

The latest market selloff can be blamed on any number of things. China slowdown or a possible hard landing in China, basic profit taking after a six-year run, declining earnings, no further QE in the US, a uptick in rates in the US, weak US economy, commodity (including crude oil) collapse, weakening of 'risk' currencies due to the commodity selloff, disappearance of buybacks, dividends being lowered, strong US dollar pressuring balance sheets, bear markets in pc sales, rail fees,.........the list goes on and on. Bottom line: we need something solid to rally on and I fear any earnings pops will be given back. Netflix will be a good example tomorrow after the close. We simply cannot justify going higher without a catalyst.

The Wall Street Journal reminds us that this is not 2008 redux but just 'where' we bottom is open to…

Investors may wade into unknown territory next month as the Federal Reserve readies the first rate hike in nearly a decade amid a corporate earnings recession.

S&P 500 earnings are on track to close their first reporting season of negative growth since the Great Recession and estimates call for sub-zero growth in the current quarter as well.

Even if the trend reverses next year, as expected, a Fed rate hike in December could mark an unprecedented conflict between a tightening cycle starting at the same time as earnings fall into recession.

"We can't think of any instances when the Fed was hiking during an (earnings) recession," said Joseph Zidle, portfolio strategist at Richard Bernstein Advisors in New…

I'm continually saving charts and data points which I find interesting but generally don't post enough to share the data. That being said, I thought "wth" and decided to share some of my most recent. Perhaps you can find a few of interest or maybe you can translate one into a trade. It certainly can't hurt. Your comments would be of interest and will be answered. Happy trading.

Online shoppers by income group. It certainly seems Amazon benefits by middle income buyers. Possibly they just don't have the 'time' to shop in a store, working 60+ hours a week and balancing soccer games, football, cheerleading practice, dinner, laundry, etc.

Jet[dot]com is now selling some items at a loss to gain marketshare from Amazon…

The chart above is the Bloomberg Commodity Index. It consists of baskets of common commodities, including energy, metals, foodstuffs, softs and precious metals.

After a fairly flat period in the 1990s, the index leapt upward beginning in the early 2000s. The context explains the jump: High inflation, weak dollar and low interest rates. From 2001 to 2007, the dollar lost 41 percent of its value, and all commodities priced in dollars skyrocketed. At the same time, China began a huge expansion of its infrastructure, transportation, housing and manufacturing sectors. The BCOM index moved from around 90 to almost 240.

You know the rest of the story: Inflation is nowhere to be found, and the Federal Open Market Committee is concerned about deflation. The…

You'll hear "reverting to the mean" or "mean reversion" bandied about occasionally however not on a daily basis......unless you're watching gold's long sell off since it's explosion to the upside. According to Investopedia, mean reversion is:

A theory suggesting that prices and returns eventually move back towards the mean or average. This mean or average can be the historical average of the price or return or another relevant average such as the growth in the economy or the average return of an industry.

Case in point is my theory that commodities are/have been doing just that. Click on this long term chart of the CRB Index for a better view.

After decades trading in a wide range, commodities took off as the dotcom bubble broke in 2000. Money had to go somewhere, didn't it?

Oil production in North America is booming, crude oil today hitting new 4-year lows, and it is now beginning to have a huge impact on global hydrocarbon markets. In fact, some believe that the U.S. will eventually overtake Saudi Arabia and Russia as the world’s biggest producer of the key commodity, with some calling for the surge to happen by the end of the decade and OPEC is left if in a precarious situation. If they cut production, prices may rise but they also risk losing customers to another provider (the U.S. or Russia). If they do not cut production, prices will likely continue to fall due to excess capacity worldwide.

This push towards energy self-sufficiency is largely thanks to the combination of fracking and oil shale, as previously unobtainable supplies are now…

The investigation is looking into whether single cargoes of metal were used multiple times to obtain financing, according to industry sources. Trading houses and banks have sent executives to the port to physically check on their exposure, while some banks have stopped new metal financing to some clients in China. Traders said holders of copper in Qingdao that were having difficulty obtaining finance could also be forced to deliver

Ah, 1978 and U.S. airline deregulation. What a thing of beauty. Suddenly there seemed to be a new airline popping up each year, all vying for a piece of the pie in the sky. Then how to drum up business. Remember the days of airfare wars? A new start-up would lower prices to attract business and the big boys , no longer with the luxury of their monopoly, had no choice but to follow suit as their passenger counts fell in step.

The consumer was obviously elated! Even those who previously couldn't afford to visit Grandma in Boca, were suddenly able to take to the skies; kiddies and all.

Those were the clear benefits of deregulation and the consumer loved it - but…

Just too much good research to let it disappear. Get a cup of coffee, take the phone off the receiver and snuggle up. Reprinted from one of my favs SlopeofHope

SEPTEMBER UPDATE

Overall, we are seeing divergent data coming through as usual, so we'll have to wait and see where we fall. In general, I tend to believe the longer term theme that I've laid out that our economic situation for consumers is slowly grinding to a halt while big business is taking full advantage of the globalization of the world economy and managing to keep busy. I think this is why some of this data remains stubbornly positive despite what the average guy is feeling here in the US. The fact that large multi-nationals are diverse enough to show gains abroad is great and is really beneficial to the US economy, if we didn't have that, I think we'd be in a much worse…

We welcome you to post a blog entry, oped or share your daily reading with us as long as it is relevant to the topic of investing and not an attempt to sell a product, proprietary strategy, platform or other service. Please provide links to any research data and if re-posting other articles, give credit where credit is due providing a back link to the original site.

300 words minimum per post. You may also sort by category or search by topic. Don't forget to comment and please "share" via Facebook, Twitter and Google+. If you have any questions, please contact us.